Federal shutdown's impacts felt at local breweries

In its third week and nearing a likely end Wednesday evening, the federal government's disagreement over spending closed many federal agencies and national parks. One such agency, the Treasury Department's Alcohol and Tobacco Tax and Trade Bureau (TTB), regulates procedures like expansion, labeling, and licensing for companies. Deemed non-essential, the entire bureau was forced to shut its doors until the furlough's end.

While some of Petaluma's smaller breweries that operate only in California are subject solely to state regulations, companies operating across state lines come under the federal jurisdiction of the TTB. One such brewery is Lagunitas Brewing Co., which runs a second brewery in Chicago and ships roughly 400,000 barrels nationwide each year.

Its efforts to produce a sought-after seasonal beer in a larger bottle size have stalled because of government closures. That's because, in order for Lagunitas to sell the beer in the larger size, the TTB must approve new labels for it.

"Right now we are waiting on labels for our &amp;&lsquo;Lagunitas Sucks' in 32 ounce bottles, but since certain parts of the Treasury are shut down, the phone just says it's closed. There is no response," says owner Tony McGee.

Although McGee faces a relatively minor setback — one that will halt the popular beer's sales until the TTB comes back online — he believes that it could be worse if not for his company's ongoing customer loyalty locally and nationally.

"Imagine if you were just opening your brewery in the next few weeks and you needed a brewery license processed," he said. "That would be it, you can't open (until the TTB opens)."

Just across the road, newly established Petaluma Hills Brewing Co. is faring better, perhaps because the new company's brews haven't yet been released, nor the tasting room unveiled. But owner JJ Jay says that, since they won't be shipping beer across state lines, they don't have to wait on the TTB's OK to begin selling their product.

"I am slightly affected, not majorly affected," he said.

One way he has been impacted is through a collaboration with another Petaluma beer maker, HenHouse Brewery, to share equipment. That collaboration has come to a halt for the foreseeable future due to that brewery's plans to expand being held up by the shutdown.

"We are working on an alternating proprietorship with HenHouse," Jay explains. "This means they will rent equipment from me to brew larger quantities of their own beer. Unfortunately, they are waiting for expansion approval from the TTB, which is on hold, so that will cause some delay. For them it's a bigger deal. They won't be able to start brewing their beer or making additional revenue," he observes.

In fact, HenHouse was reportedly mid-transition from a 60-gallon per week to a 1200-gallon per week establishment when the shutdown occurred. Until the regulatory functions at the TTB return, this expansion will be on hold.

Perhaps the largest fear expressed by local brewers, though, is that small setbacks now may impact customer loyalty in the longterm.

As McGee puts it, "It scares people. It makes people think more when they go shopping or out to a bar" about why their favorite beer is not there.

In other words, when a preferred beer goes missing from the shelf, shoppers may be more than willing to find an alternative. For any company, shoppers seeking alternatives to their product — be they cheaper, tastier, or simply more available — could permanently change their choice.

As of Wednesday afternoon a Senate deal to end the shutdown appeared imminent, meaning things could return to business as usual for breweries by the end of the week.